10 Tips for Getting the Biggest Tax Refund


7
Make Those Kids Count

No one has children just for the tax breaks, but it's a nice perk. In the past, parents could cash in on dependent children in two big ways: the personal exemption and the Child Tax Credit. Unfortunately, the Tax Cuts and Jobs Act of 2017 got rid of the personal exemption, which allowed taxpayers with families to deduct a generous $4,050 each for both parents and another $4,050 each for every dependent child under 19 years old, plus full-time students between 19 and 23 years old.

The good news is that the federal government doubled the value of the Child Tax Credit from $1,000 to $2,000 each for every dependent child 16 years old or younger. The Child Tax Credit is much more valuable than the personal exemption because it's a credit, not a deduction. That means the full dollar value is subtracted from your final tax bill, not just your taxable income. Even better, it's a refundable credit, meaning that if your credits are larger than your tax bill, you get to keep the change.

There is a tradeoff, though. Notice that the personal exemption used to cover older kids, including those in college. While it's true that the Child Tax Credit is only good up to 16 years old, the tax reform bill introduced a new $500 tax credit for children up to 23 years old who are full-time students as well as $500 each for other "qualifying relatives" who live in the household, including elderly parents [source: Perlman].